The application of Indian Accounting Standards (Ind AS) to real estate transactions presents a distinctive set of challenges that transcend conventional accounting paradigms. The inherent complexity and diversity of real estate arrangements-require judgment to be applied for recognition, measurement, and disclosure, making it particularly nuanced under Ind AS. The determination of the point of transfer of control and the amount of revenue to be recognised in such arrangements is often influenced by legal formalities, extended construction timelines, customer payments linked to construction milestones, possession timelines, and compliance with the Real Estate (Regulation and Development) Act, 2016 (RERA). This edition of the Accounting and Auditing Update (AAU) features an article that discusses the key aspects of accounting for real estate companies in India under Ind AS, focusing on point of transfer of control and separation of significant financing component in such arrangements.
In India’s evolving corporate landscape, where financial transparency and regulatory compliance are under growing scrutiny, the recognition of deferred tax asset (DTA) has emerged as a critical area of focus. While as per Ind AS 12, Income taxes, the criteria for recognising DTA on unused tax losses and tax credits are aligned with those for recognising DTA on deductible temporary differences, such recognition is inherently complex, highly judgemental, and predicated on forward-looking assumptions, making it particularly challenging for loss-making entities. This edition of the AAU features an article that offers insights on some of the key considerations for recognition of DTAs arising from the carry-forward of unused tax losses.
As always, we have included a digest of recent regulatory updates in India and internationally.
We would be delighted to receive feedback/suggestions from you on the topics we should cover in the forthcoming editions of AAU. For more information on this update, please write to aaupdate@kpmg.com.
We do hope you find this Update informative and useful.
